Base Prospectus - Malta Financial Services Authority

TAXATION
Prospective purchasers of Notes are advised to consult their tax advisers as to the tax
consequences under the tax laws of the country of which they are residents of a purchase of
Notes, including, but not limited to, the consequences of receipts of interest and sale or redemption
of Notes.
UNITED STATES TAXATION
To ensure compliance with U.S. Treasury Department regulations, we advise you that any tax
discussion herein was not written and is not intended to be used and cannot be used by any
taxpayer for purposes of avoiding U.S. federal income tax penalties that may be imposed on the
taxpayer. Any such tax discussion was written to support the promotion or marketing of the Notes
to be issued pursuant to this Prospectus. Each taxpayer should seek advice based on the
taxpayer’s particular circumstances from an independent tax adviser.
The following summary of certain U.S. federal income tax consequences to U.S. Holders (as
defined below) of the purchase, ownership, and disposition of Notes issued by the Issuer deals
only with the treatment of U.S. Holders who are original purchasers of such Notes at the issue
price (as defined under ‘‘Original Issue Discount’’ below) and who hold such Notes as capital
assets (generally, assets held for investment). This summary is not a complete listing of all
possible U.S. federal income tax consequences of an investment in Notes and does not deal with
persons in special tax situations, such as financial institutions, insurance companies, regulated
investment companies, grantor trusts, tax-deferred accounts, tax-exempt institutions, dealers or
traders in securities or currencies, investors that mark to market their securities, or persons holding
such Notes as part of a hedging transaction, an integrated transaction or a ‘‘conversion
transaction’’ or as a position in a ‘‘straddle’’ for U.S. federal income tax purposes, persons
entering into a ‘‘constructive sale’’ transaction with respect to a Note, U.S. Holders that own (or
are deemed to own) 10 per cent. or more of the Issuer’s voting stock, partnerships or other entities
classified as partnerships for the U.S. federal income tax purposes, real estate investment trusts, S
corporations, persons who hold Notes as part of a ‘‘synthetic security’’ and persons whose
functional currency is not the U.S. dollar. Further, this summary does not address any tax
consequences applicable to holders of equity interests in a holder of Notes. Persons considering
the purchase of Notes should consult their tax advisers concerning any application of U.S. federal
income tax laws to their particular situation, as well as any consequences arising under the laws of
any other state, local or foreign taxing jurisdiction. The information set out in this section is based
on current provisions of the Internal Revenue Code of 1986, as amended (the ‘‘Code’’), the
Treasury regulations promulgated thereunder (the ‘‘Treasury Regulations’’) and judicial decisions
and administrative pronouncements, all of which are subject to change, which change may be
retroactive.
As used herein, the term ‘‘U.S. Holder’’ means a beneficial owner of a Note that is for U.S.
federal income tax purposes (i) a citizen or resident of the United States, (ii) a corporation, or other
entity taxable as a corporation for U.S. federal income tax purposes, created or organised in or
under the laws of the United States or of any political subdivision thereof, (iii) an estate the income
of which is subject to U.S. federal income taxation regardless of its source, or (iv) a trust if a court
within the United States is able to exercise primary supervision over the administration of the trust
and one or more United States persons for U.S. federal income tax purposes (‘‘United States
Persons’’) have the authority to control all substantial decisions with respect to the trust, or any
other trust that is treated as a United States Person.
This summary addresses Notes that will be treated as debt for U.S. federal income tax
purposes, except as provided below. If, at the time of issuance, the Issuer believes that Notes of a
given series will not be treated as debt for U.S. federal income tax purposes, the tax treatment of
such Notes will be discussed in the applicable Final Terms.
Interest
Payments of interest on a Note (including additional amounts payable in accordance with
Condition 7, if any) generally will be taxable to a U.S. Holder as ordinary income at the time such
payments are accrued or are received (in accordance with the U.S. Holder’s usual method of
accounting for U.S. federal income tax purposes). Such interest (along with any original issue
discount (‘‘OID’’) on the Note, as described below) will constitute foreign source income for U.S.
federal income tax purposes. For tax years beginning before 1st January, 2007, such income will
84